Some struggling Big Tech names may make a comeback this month.
BTIG’s Julian Emanuel is targeting a corner of the market that isn’t directly correlated to economically sensitive trades as the second quarter begins.
“The plays that have benefited the last several months — the reopening plays value, small caps — may in fact take a pause because they’ve run so far,” the firm’s chief equity and derivatives strategist told CNBC’s “Trading Nation” last week.
“This was a very lonely call several weeks ago that large cap tech FAANG looks very interesting to us,” said Emanuel. “The secular growers have been cast aside in the first quarter in favor of value.”
The benchmark tech-heavy Nasdaq gained a fraction of one percent last month. But it appears the index, along with the broader S&P 500, is roaring into April.
The Nasdaq closed last week up almost 4% while the S&P 500 ended at record highs, breaking above the 4,000 level for the first time ever.
Emanuel also favors health care. The Health Care Select Sector SPDR ETF, which tracks the group, is struggling over the past couple of months.
“It’s trading at such a historic discount to the S&P 500, we think there’s lots of upside there,” he added.
Overall, Emanuel expects seasonal trends will act in investors’ favor.
“Seasonality is a very underrated part of what drives markets,” he said. “When you look at April… it is the sort of capstone of the best six months of the markets going back many, many years.”
At the same time, he’s also encouraging patience and caution because the market’s gains have happened so quickly.
“Intelligently employed capital, particularly into those sectors like health care and select [large cap] tech, really do have upside,” Emanuel said. “You need to think long-term and not expect a profit the minute you start a position.”